Key Highlights

● Second-quarter adjusted EBITDA was roughly flat at $212.6 million versus $212.7 million.

● Period-end horsepower utilisation slipped to 94.4 per cent from 96.0 per cent a year earlier.

● The leverage ratio fell to 2.6 times from 3.3 times a year earlier.

● Full-year 2026 adjusted EBITDA guidance was narrowed to $865 million to $885 million.

Archrock (NYSE:AROC) provides natural gas compression services to energy producers and midstream operators in the United States. Its core activity is contract operations, in which it owns, operates and maintains compression equipment at customer sites under contracts, supplemented by aftermarket services. Compression is needed to move gas from wells through gathering systems and pipelines, so demand follows gas production volumes and infrastructure investment instead of short-term commodity prices alone. At 30 June 2026 the company had 4,784 thousand horsepower available, of which about 4.5 million was operating. The shares trade on the NYSE under AROC. Customers include exploration and production companies and midstream operators, so contract terms and counterparty health matter. Cumulative repurchases since April 2023 total $96.9 million.

Second-quarter 2026 results

Archrock reported second-quarter 2026 results on 4 August 2026. Revenue was $371.2 million, compared with $383.2 million a year earlier, while net income rose to $66.7 million from $63.4 million and earnings per share were $0.38, against $0.36. Adjusted EBITDA was $212.6 million, essentially flat on $212.7 million. Adjusted gross margin improved to 66% from 62%. Period-end horsepower utilisation was 94.4%, compared with 96.0% a year earlier, and operating horsepower was 4,516 thousand against 4,651 thousand. The release explains that revenue fell about 3% because aftermarket services declined to $42.0 million from $64.8 million, reflecting the absence of a prior-year overhauled engine sale and weaker major maintenance demand, while contract operations revenue rose 3% to $329.3 million. Because contract operations carries a much higher margin, the mix shift lifted the blended figure. Capital expenditure in the quarter was $98.0 million. Basic and diluted earnings per share were both $0.38, and the quarter's gross margin on a GAAP basis was 47%.

Guidance, capital spending and dividend

Management tightened its 2026 adjusted EBITDA guidance to $865 million to $885 million from $865 million to $915 million, which removes some of the upside previously allowed. Guidance also includes net income of $290.75 million to $310.75 million, contract operations revenue of $1.325 billion to $1.335 billion, growth capital of $250 million to $275 million and cumulative growth capital of $1.4 billion to $1.6 billion across 2027 to 2030. The quarterly dividend was $0.23 per share, about 10% above $0.21 a year earlier, covered 3.1 times by cash available for dividend. The leverage ratio was 2.6 times, down from 3.3 times, with long-term debt of $2.3 billion and available liquidity of $631 million. No shares were repurchased in the quarter, leaving $113.2 million of remaining authorisation. Cash available for dividend guidance for the full year is $566 million. Maintenance capital is guided at $125 million to $135 million and other capital at $25 million to $35 million.

A Mix Shift Toward Contract Operations Lifted Margins

Archrock's revenue dipped as a one-off prior-year engine sale didn't repeat, but the shift toward higher-margin contract operations lifted adjusted gross margin to 66 per cent from 62 per cent even as utilisation eased slightly. Management narrowed guidance from the top of its prior range rather than raising it, and with a growth capital programme of up to $1.6 billion planned through 2030, sustained customer demand for new compression equipment at acceptable returns is the key assumption behind that spending.